Economic outlook improves as resources power growth in provinces west of the Ottawa River
Ottawa, ON – Western provinces will continue to set the economic pace in Canada, and recent indicators in Ontario’s economy bode well for its outlook over the next two years, according to The Conference Board of Canada’s...
Ottawa, ON – Western provinces will continue to set the economic pace in Canada, and recent indicators in Ontario’s economy bode well for its outlook over the next two years, according to The Conference Board of Canada’s Provincial Outlook – Spring 2012.
“The Ottawa River is a dividing line between modest and more positive economic growth prospects in the next two years,” said Marie-Christine Bernard, associate director, Provincial Outlook. “It is no surprise that Western Canada continues to perform well, thanks to major projects in the mining and energy sector. Things are also picking up in Ontario, despite the impact of belt-tightening measures by both the provincial and federal governments. Quebec and the Atlantic provinces will begin to reap increased benefits from their resources in 2013.”
Elevated oil prices and expanded activity at numerous oilsands projects will help drive Alberta to the fastest economic growth in the country in both 2012 and 2013. Bolstered by strong income gains and population growth twice the national pace, Alberta’s economy is forecast to grow in the next two years by 3.8% and 3.7%, respectively.
Real gross domestic product is forecast to grow by 2.9% in both Manitoba and Saskatchewan. After real GDP growth of 4.8% last year, the pace in Saskatchewan is easing due to cuts in potash production. But the province’s hot labour market will produce an unemployment rate of just 4.5% by next year and strong growth in personal disposable income. In Manitoba, growth will be led by expanding mining output combined with an expected rebound in agriculture.
If the debt crisis in Europe continues to fester, economic growth in Western Canada would slow modestly this year. Europe’s financial crisis could have a dampening effect on growth in the United States, although, at this time, the US economy appears to gaining momentum – which is good news for British Columbia and Ontario in particular.
BC’s economy is forecast to grow by 2.4% this year and by a further 3.4% in 2013. The forestry sector is expected to gain ground serving the US housing market and the mining sector is increasing its production.
Brisk US vehicle sales are bolstering Ontario’s export sector and supporting growth in manufacturing output, while business investment remains strong. But public sector spending restraint will limit employment growth. Growth in Ontario is expected to come in at 2.3% this year, up from the 1.9% forecast in the Winter 2012 outlook.
On the other side of the Ottawa River, Quebec’s economy continues to face modest growth prospects, in part due to a heavier fiscal burden. Despite some bright spots in the export sector and mining investment, rising taxes and minimal employment growth will limit real GDP to a gain of 1.7% this year.
Sluggish economic conditions persist in the three Maritime provinces in the next two years. The construction industry is wrapping up several major projects, and tepid employment prospects have encouraged workers to leave the region for other provinces. Prince Edward Island is forecast to achieve growth of slightly below 2% both years, in part because its fiscal restraint plans will reduce construction and public sector employment.
Nova Scotia’s prospects have brightened in the past few months thanks largely to a stronger domestic economy, helping the province to grow by 1.8% this year. New Brunswick’s economy is forecast to grow by just 1.3% in 2012 due to faltering construction output and limited job growth. Both provinces can look forward to stronger growth of more than 2% each in 2013.
With real GDP growth of 0.5% in 2012 and 1.3% in 2013, Newfoundland and Labrador will rank 10th among the provinces both years. But when declining offshore oil production is removed from the forecast, the rest of the economy is projected to grow by 4.6% this year because of solid business investments.